EUROPEAN SESSION

In the European session, we get the final PMIs for the major Eurozone economies and the UK. The final data is rarely a market mover because markets react more to fresh information like preliminary data.

The week started with a positive risk sentiment given the lack of US attacks on Iran over the weekend and the latest diplomatic developments. Iran has proposed a two-day framework to reopen the Strait of Hormuz in exchange for US concessions, including sanctions relief, the release of frozen assets and changes to the US military presence. However, Washington has not accepted the proposal, and no agreement has been reached yet.

Nevertheless, the markets interpreted the shortened timeline for the reopening of the Strait of Hormuz as a positive development as expectations for a potential deal strengthened.

AMERICAN SESSION

In the American session, the main highlight is the US ISM Manufacturing PMI which is expected to match the prior month reading at 54.5. As a reminder, the S&P Global PMI indicated that the US economy continued to boom at the start of the fourth quarter. The agency noted that if the reopening of the economy after COVID was excluded, recent months have seen the best growth spell for US businesses since early 2015.

However, cost pressures remained a key concern, notably as the renewed surge in oil prices reverberates through to impact a wide variety of goods and services. The result is the sharpest increase in selling prices for over four years to a pace that indicates consumer price inflation is likely to rise further above the Fed’s target in the coming months.